Is it cheaper to buy a smartphone outright?

Pay now or pay (more) later

Last updated: 09 November 2018

Buying a smartphone outright is almost always cheaper in the long run, compared to locking yourself into a two year contract. But there are some instances where it’s not that black and white, and you may find that new, popular models from Apple and Samsung, wind up costing less on a plan.

Buying outright means you pay in full, own the phone and are free to select your preferred carrier. While flexible, selecting a carrier takes extra research, but can save you money in the long run.

Buying on a plan makes it easy to put that new phone in your pocket with no money down, because it spreads the phone's cost over 24 months. The downside of this is that you're stuck with that carrier, and terms, for the life of the contract.

Our smartphone reviews test models from Apple, Samsung, Google and more to find out which smartphones have the best sound quality, displays and cameras.

Is it cheaper to buy outright or on a plan?

This is the first step you. It essentially comes down to the age of the product, and whether you want a major brand smartphone from Apple or Samsung.

Waiting for a sale should knock a few hundred dollars off the asking price.

Phones prices drop even more after a new model comes out.

If you don’t care about the latest phone, you can pick up a model that’s one or two years old for significantly less.

Just make sure that the phone can connect to current networks (eg 3/4/5G), and that it’s not locked to a particular carrier.

You’re also free to shop around for a SIM-only plan (often called bring your own device or BYOD) which can drive the price down over 12 to 24 months.

Sim-only plans typically offer the same data, talk and text as phone contracts for far less.

They generally come in two flavours; monthly “no lock-in” payments, and 12 month contracts. The latter is typically the cheapest option.

You’re free to compare prices, data limits and so on across different carriers.

Carriers regularly have sim sales online. These deals often stay intact for as long as you stay with the provider, even after the contract has ended.

If you find a plan you like, you can use it with other unlocked phones in the future.

Plus, you’re not locked to one provider, which means you can swap sims whenever you want. This is particularly handy when traveling overseas.

When you combine an outright phone with a BYOD plan, the savings can really add up. You can get a good handle on this by adding the cost of an outright phone, with a BYOD device plan over two years, then dividing it by 24. This will show you the monthly equivalent of a plan, so you can directly each option.

Other options

We've sorted SIM-only plans to show the total cost for a 24 month period, with the cheapest plan shown first. The best plan is available for under $500.

How can I save money on a phone plan?

Though buying outright is cheaper in most cases, plans aren’t always a bad deal. If you’re getting the latest model from Samsung or Apple for example, there’s only a small difference in price between plan and paying for it upfront. But that’s pretty well the only time you’d want to consider a plan.

Telcos can offer surprisingly good deals, if you’re prepared to lock in for 24 months.

This can actually results in a cheaper outcome over two years, compared to an outright purchase with a BYOD plan. So keep an eye out.

They can also entice you with bonus features such as extra data, unmetered Netflix, damage insurance and so on.

You can even get discounts for bundling other services such as internet or home phone.

Shop around and compare sales across different service providers.

So while you’ll still wind up paying a lot, sales can increase the overall value of a plan package.

Plus, you’re not locked to one provider, which means you can swap sims whenever you want. This is particularly handy when traveling overseas.

When you combine an outright phone with a BYOD plan, the savings can really add up. You can get a good handle on this by adding the cost of an outright phone, with a BYOD device plan over two years, then dividing it by 24. This will show you the monthly equivalent of a plan, so you can compare each option.

Is leasing an option?

If you’re the kind of person that upgrades every time their two-year contract is over, then leasing is a great option. Not only do you save money, you won’t wind up with a drawer full of old phones after ten years.

If you become attached to the phone, most service providers and retailers will give you the option to buy it when your contract is over.

All you need to do is pay the difference between a lease contract, and an own contract.

Over to you

We invite you to share you experiences in the comments to help others who are weighing up their options.

What have you chosen?

Have you found a good deal?

How did you make the choice?

What are you looking for with your next phone or plan?

Why we've partnered with WhistleOut

We've partnered with search engine WhistleOut to help you find and buy the right plan for you. The links above send you to a selection of SIM-only or contract phone plans for you to consider. While we make money if you buy through WhistleOut, this doesn't influence our rankings and 100% of the money we make goes straight back into our nonprofit mission.